CMA Final · Direct Tax Laws and International Taxation · Business Restructuring

Under the Income-tax Act, 2025, a transaction of business restructuring or reorganisation entered into by an enterprise with an associated enterprise is treated as an international transaction. Which statement about this treatment is correct?

A business restructuring or reorganisation between associated enterprises is an international transaction whether or not it affects profit, income, losses or assets, at the time of the transaction or at any future date. No profit or loss effect is needed, and only one party must be a non-resident.

1. AIt is covered only if it increases the profit of the Indian enterprise at the time of the transaction
2. BIt is covered only if it produces a loss or reduces the assets of the enterprise in a later year
3. CIt is covered irrespective of whether it has any bearing on profit, income, losses or assets at the time or at any future dateCorrect
4. DIt is covered only if both associated enterprises are non-residents